March 20, 2017 - Chevron calls end to LNG Megaproject (Gorgon, Wheatstone) after $88 billion spree. Gorgon will not have 4th train and Wheatstone will not have 3rd train. Chevron's Australian LNG facilities have suffered from cost blowouts, delays and poor timing from an LNG supply gut. Nigel Hearne says Chevron is investing in smaller, more targeted investments with quicker economic returns and is focused on generating returns on its existing investments to pay back a dividend for money already spent. Other than all of that, tell me something I don't already know.
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Dear Shareholders,
Please sack this board.
Thank you
IRS
Problem with FGP is the Contract with Kazahkstan expires in 2033.
No new major capital projects would probably be a blessing in disguise. Chevron has proven they cant run them. Make em all LSTK, use industry Project Management principles instead of slavishly following CSOC and CPDEP), have real experts do the contract instead of amateurs. make all on the project accountable (chained to the oar) for the success before promoting them on. Then Chevron will find the success that eludes them
Biggest problem for Chevron is no government would sign a future PSC or concession with CVX for a new LNG project. A government would be better off with Shell or XOM. CVX is relegated to be only a Permian oil company, if it can't execute major projects. I have already heard XOM and Shell business developers using this argument to their advantage against us. Future growth will be impacted.
...Hapless Asian customers will probably be getting heavily discounted LNG paid for by Chevron and its shareholders. ---- (You're right, but I think the many professional Chevron employees who got laid off are the ones paying the biggest price while many of the management who are mainly responsible are still on the job in one place or another. What a disgrace!)
Gorgon is not generating the revenue it said it would for multiple tens of billions invested in it (and Wheatstone) . It is a major reason Chevron is in a cash crunch and people are getting laid off and Chevron is doing fire sales selling off assets. Can you blame anyone for wanting to armchair coach.
Regardless of whether the project was complex, or whether it will produce for another 50 years, those plants are not going to turn a profit for decades when Chevron needed the money most. Hapless Asian customers will probably be getting heavily discounted LNG paid for by Chevron and its shareholders.
Let's hope you are right, bqnx. A part of my pension annuity depends on it.
There is a right and wrong way to challenge and push back. I have seen some real idiots do it the wrong way. They deserve to be fired in most cases.
Evryone and their dog wants to armchair quarterback Gorgon. It was the most complex project ever attempted. We did it. Now we will sell LNG for 50 years at 400,000 boepd. Everyone reading this will be six feet under and those tankers will still be loaded every couple days and sail off to hapless Asian customers.
It's a shame Kirkland wasn't put down 10 years earlier so we wouldn't be paying such a steep price for his poor decision making skills. He did more to ruin the company than anyone else.
9itg: I admire professionals who speak up when they believe it's the right thing to do. It shows integrity. But in the corporate world as in politics, you must know when and where to speak your mind and not lose sight of "how" to convey the message itself. All these big shots are all too sensitive to not be lectured by subordinates in front of their high-flying peers. It's a shame it's so. It's no different with the so-called Stop Work Authority (SWA) that management and our safety professionals harp about so often. It may work sometimes, but call those words when top management has been told to hurry up and jump the CPDEP gates to phase 5, the poor person who does that will see their career move horizontal until they are deep 6'ed in the first round of layoffs.
There is a story I heard about a mid level prc pm who is a West Point grad and actually stood up in a meeting when the gorgon site was being selected. He challenged Kirkland and the rest of the prc club that locating a mega project on a pristine nature reserve was ludicrous. The individuals career ladder was horizontal from that point forward and he was laid off in the first round
Prc module center of excellence is a joke. Delays and change orders on all the mega projects have been horrendous. All these individuals need to be held accountable and fired
FGP has already incurred over one billion dollars in change orders at the Korean module yards and they just started cutting steel on 200 modules
The unofficial liquidation of the company all in the name of sustaining the dividend continues.
So, how much money has Chevron invested in this refinery? How much positive revenue (If any) does Chevron generate from this refinery? When will Chevron sells its stake in Gorgon and Wheatstone? We all know it will eventually happen.
China's Sinopec buys first major refinery in Africa from Chevron - China's Sinopec (600028.SS) (0386.HK) will pay almost $1 billion for a 75 percent stake in Chevron Corp's (CVX.N) South African assets and its subsidiary in Botswana to secure its first major refinery in Africa, the companies announced on Wednesday.
Angola LNG probably ain't far behind
Chevron didn't find any buyers for the China Bohai (Yellow Sea) properties. What else can they sell to stay afloat until oil goes back up?
Smaller, more targeted investments with quicker return. In other words, Chevron is hurting for money and can't wait for long term returns. Just keep borrowing to pay that quarterly dividend and 'hope' that oil prices get above $60 as soon as possible. Tenghiz will be over budget and behind schedule like all the others. The Permian will finance that little adventure. As long as investors are happy with JW, nothing will change except your employment status.
Smaller more targeted investments with quicker economic returns? Any time frame is quicker than never. Gorgon and Wheatstone will pay out the day after never. Focus on projects that make money instead of lose money is what he should have said. Any company with a pair the size of mustard seeds would have gutted their execs long ago for any one of the flops we've seen in the last 10 years.
Another stellar, fantastic, none deadwood employee performance. Great job CVX. Great job.
Kind of like slitting both wrists and upon nearly bleeding out determining time to apply a pressure bandage. Hopefully the PRC lot that allowed these CFs to go on will be in the next round of severance cuts. No doubt some are already looking forward to joining next generation CAPEX black hole in Tengiz.
$88 Billion, sure is a lot of dividends.
Smart move.